Keats Manufacturing's 20-year-old move to El Paso has paid off

Matt Keats, president and co-owner of Keats Southwest, last week showed El Paso Mayor Oscar Leeser one of the metal parts made at the East El Paso factory for maquiladora plants in Mexico. Leeser, in a statement, said his plant tour was part of an initiative to meet with local companies to find out how City Hall can help them expand.

Twenty years ago, Matt Keats moved to El Paso with his wife and two children to open a factory branch of his family's Chicago manufacturing company to attract more business from the maquiladora industry in Juárez and other parts of Mexico.

Keats Southwest has grown from about $1 million in sales and eight employees when it opened in 1994, to $10 million in annual sales today. Fifty employees work three shifts at its 25,000-square-foot metal-stamping plant, built by the company 12 years ago, at 11425 Rojas in East El Paso.

The growth has been good, but also slower than expected because the company hasn't been able to get all the manufacturing services and suppliers it needs in this area to allow it to grow even larger, Keats said.

"I assumed we would be at the same level, or bigger than our Chicago factory by now," he said. The Chicago factory, headquarters for parent Keats Manufacturing, has annual sales of about $20 million and employs 125 people, he said.

"I expected more growth" for Keats Southwest in the last 20 years and for the El Paso manufacturing industry as a whole, he said.

The El Paso factory is a piece of the multibillion-dollar supply chain tied to the maquiladoras, or factories, in Juárez and other areas of Mexico, and part of El Paso's still-important manufacturing sector.

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"Keats came here 20 years ago, when very few (maquiladora) suppliers were here. Its been good for El Paso and the region," said Manuel Ochoa, a former economic developer for El Paso agencies and now vice president of development for Tecma Group, an El Paso company that operates maquilas in Juárez. Keats is one of the best examples of how a supplier can locate here and thrive, he said.

"Little by little, we are seeing the number of suppliers increase. But we need more," Ochoa said.

Matt Keats, president and co-owner of Keats Southwest, stands outside his East Side factory. The maquila supplier is celebrating its 20th anniversary with a party Friday during the El Paso Chihuahuas game in the Downtown ballpark. (Photos by VICTOR CALZADA — EL PASO TIMES)

Keats Southwest began operations in August 1994. But it will celebrate its 20th anniversary Friday with a party during an El Paso Chihuahuas game at the new Downtown baseball stadium, which Keats, a huge sports fan, has staunchly backed from its inception. The company has rented two floors at The Big Dog House, the baseball park's party building, for 200 invited customers, suppliers, and others from throughout the United States and Mexico to celebrate.

Keats, 56, who was born 10 months after his father and his uncle founded Keats Manufacturing in Chicago, last week reflected on his company's entry here and about El Paso's manufacturing industry. He talked inside his office jammed with Chicago and El Paso sports memorabilia, and from his factory's production floor, where stamping machines were quietly spitting out thousands of small metal parts that are trucked to assembly plants in Juárez and other parts of Mexico.

The plant produces well over 100 million small, metal parts per year — ranging from auto-visor clips for garage-door openers to metal contacts for electronic devices in motor vehicles.

"I told the mayor (who toured the factory last week), and I've said this over and over for 20 years: This should be a manufacturing hub" because of El Paso's central location along the U.S.-Mexico border, Keats said. "Chicago and the East Coast are still (manufacturing) hot beds. Chicago has four to five (metal) heat treaters and 10 (metal) plating companies." El Paso has only one metal-plating company and no heat treaters, he said.

"The only reason we haven't surpassed our Chicago plant is because of the lack of secondary services, specifically heat treating," Keats said. The company makes a lot of parts that need heat treatment, which hardens pliable types of steel, Keats said. Parts that need that process have to be made at Keats Manufacturing's Chicago factory, which has access to heat treaters.

A heat treater opened in Las Cruces several years ago, but failed because of production problems, he said.

"We're still trying to recruit" a heat treater, Keats said. "I talked to the mayor about it." This area has about 10 metal-stamping companies that could use the service, he said.

Bob Cook, former president of the El Paso Regional Economic Development Corp., and now, a private economic development consultant, said recruiting maquila suppliers here has been an ongoing effort for years. El Paso succeeded in getting many plastic-injection factories, which supplied maquilas, to move here, but many have closed or moved in recent years.

More than $8 billion a year in parts and other supplies are bought by maquilas in Juárez, but, Cook said, probably less than 10 percent of that market is being filled by companies in this area.

"Keats came to El Paso with a very good reputation and commitment to quality, and did a good job of capturing part of the market, not just in Juárez, but along the border," Cook said. "Most of the supply companies tend to be small to mid-size, like Keats. But not all of those companies are willing to take the risk (of moving here) like Keats."

Keats said he and his brother, Wade Keats, 59, co-owner of their company, were introduced to El Paso when they traveled here in 1992 for a big, annual, maquiladora trade show.

"We kept hearing customers who wanted us to move here" to be close to their maquiladora operations, which reduces shipping costs, Matt Keats recalled. Potential customers also were showing interest if the company had a factory here, he said.

The brothers, along with their other partner, Matt Eggemeyer, 45, grandson of their uncle, were in the process of taking over ownership and leadership of the company in the early 1990s, and were looking for ways to grow, he said. With dozens of maquiladoras just across the Rio Grande from El Paso, opening a plant here made sense, especially since the company's factory site in Chicago was landlocked, he said.

Matt Keats volunteered to move here, and three workers at the Chicago plant came with him.

"It was a culture change," but it helped that his wife went to the University of Arizona and was familiar with the desert landscape, he said. "We adapted, and now we call this home."

Matt Keats hopes one or both of his sons, both in college, may one day get interested in running the company. His brother's 29-year-old son, Brad Keats, has been training at the El Paso factory for several years, and has become a star salesman, he said.

"I am 56, and I am not retiring anytime soon, if at all," Matt Keats said. "It's in my blood.

Manufacturing should be a bigger part of the El Paso economy, he said. The jobs pay well, he said. Hourly jobs at his plant pay $9 to $31 per hour, depending on experience and duties, and salaried management positions pay much more, he said.

"Manufacturing will never die in El Paso. These companies have to get components from someone," Matt Keats said. "Manufacturing should be near the top of the list for industrial recruitment."